What does the Northrop win mean?
Every aerospace analyst surveyed by Bloomberg a week ago figured Boeing would win this competition. We did, too.
So what happened? In the end, it came down to what we have been saying all along: did the Air Force want “just” a tanker or did it want a solid, multi-role tanker transport? The Air Force went for the MRTT, saying the selection came down to one word: “more.”
So what does this mean? It’s obviously a big win for Northrop and Airbus and a big loss for Boeing. But perhaps not to the extent some might think.
At a production rate of 12-18 tankers a year, this is the proverbial gnat on the elephant’s rear when you consider that Airbus (or Boeing) deliver around 450 airliners annually.
Depending on the financial assumptions, the revenue to Airbus (or, had it won, Boeing) would have been perhaps around $3bn. This is certainly nothing to sneeze at but when you consider Airbus parent EADS revenue last year was around $55bn (final figures yet to be announced) and Airbus is 80% of this (Boeing was $66bn last year), the figure takes on some context.
Further reduce the $3bn to the airframer, because the engine suppliers grab 25% of this and the rest of the suppliers (avionics, landing gear, etc. etc.) take a portion, and the net revenue to the airframer is far less than the raw numbers suggest.
We’ll have a full financial analysis Tuesday on our corporate website.
Expect Boeing to protest and Boeing’s partisans to take it to Congress.